NEWS

A report by the inspector general of the Securities and Exchange Commission shows how Allied Capital persuaded the regulator’s staff to investigate David Einhorn for his statements that the company had overvalued its holdings.

As the Washington Post reports (March 23, “SEC inspector general raises red flags in new report”): “Without any specific evidence of wrongdoing, Allied met with SEC investigators in June 2002 to urge them to investigate Einhorn. Shortly thereafter, the SEC opened a probe, questioning Einhorn about his trading activities, subpoenaing documents, and seeking his telephone records and a list of clients.

“Soon after investigators started looking at Einhorn, they concluded that he had done nothing wrong. Investigators finished their review by mid-2003, but they refused to tell Einhorn the case was closed.”

Einhorn has asked the SEC to release immediately the non-redacted version of the report, Dow Jones reports.